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1944 Monetary Conference recalled as most important in 20th century

Joseph Brusuelas, Ph.D., left, a director at Moody’s Economy.com who covers global economies for the Dismal Scientist website; James Boughton, Ph.D., historian of the International Monetary Fund (IMF); moderator Myron Kandel, a business journalist who is a regular on PBS’ “Nightly Business Report;” Ross Gittell, Ph.D., James R. Carter Professor of Management at UNH’s Whittemore School; and Jeff Coons, Ph.D., a longtime researcher at Manning & Napier spoke on Saturday night at the Commemorative 65th Anniversary Monetary Conference Dinner on the significance of the International Monetary Conference held for 22 days in July 1944 in the Grand Ballroom of the Mt. Washington Hotel in Bretton Woods. (Photo by Edith Tucker) (click for larger version)
July 29, 2009
BRETTON WOODS — The Mount Washington Hotel celebrated the 65th anniversary of the 1944 International Monetary Conference on Saturday night by rounding up a panel of economists and financial practitioners both to reflect on its significance and to ponder the United States' role in seeking monetary stability in an increasingly global economy.

Moderator Myron Kandel, one of the nation's best-known financial journalists, marveled that the dinner was being held in the Hotel's Grand Ballroom where delegates hammered out the Bretton Woods Agreements before they were signed in the nearby Gold Room. He promised that the evening would provide "food for the brain, body, and psyche."

Mr. Kandel characterized the 1944 Conference as the most important international conference of the 20th century, topping even the 1919 Paris Peace Conference at which, after the end of World War I and signing of the Armistice of 1918, the Allied victors set harsh peace terms for Germany and other defeated nations.

Calls for a new Bretton Woods Conference continue, he said. President Ronald Reagan called for one, Mr. Kandel pointed out. During last year's worldwide financial meltdown, French president Nicholas Sarkozy and British prime minister Gordon Brown both also suggested that a Bretton-Woods-style get-together be held.

He explained that he had learned while taking an historic tour of the hotel earlier that day that ghosts haunt the hallways and suites of the hotel. Tongue in cheek, Mr. Kandel said that this means that it could well be that the spirits of then-Secretary of the Treasury Henry Morgenthau Jr., who headed up the U. S. delegation, Harry Dexter White of the U. S. Treasury Department, often called the "brains" behind his boss, Secretary Morgenthau, and the great John Maynard Keynes, by then Lord Keynes, as well as of his celebrity wife, Russian ballerina Lydia Lopokova, walk these halls, preventing a second Bretton Woods Conference from being held.

More than their ghosts are still around, Mr. Kandel said, pointing out that the institutions and systems that were established at the Conference resulted in international cooperation that remains in place to this day.

"We do not have to re-invent the Bretton Woods Conference; we need only tinker at the margins," Mr. Kandel explained. "We need to make it so that this terrible downturn does not happen again."

Dr. Joseph Brusuelas, using data that has been collected by the firm at which he is a director — Moody's Economy.com — predicted at what point he believes the Great Recession — as he dubs it — will be over and the stock market stabilized. Speaking in very broad terms, Dr. Bruseuelas said that the economy is now emerging from the 2009 Recession, but that 2010 will still be characterized by a weak economy. Happily, however, he said, 2011 and 2012 will be strong.

Dr. Ross Gittell, an economics professor at UNH's Whittemore School, said that it was thrilling to be at the Hotel, not only because its owners have recently made substantial investments but also because it represents a time when the Granite State played an important role on the world stage, thanks to the fact that the Hotel's then-owners were friends of Secretary Morgenthau, who, in turn, was a friend of President Franklin Delano Roosevelt. "Because of the Depression and World War II, the hotel was on the verge of closing, and Secretary Morgenthau used his political capital to have the Conference held here at the Mount Washington Hotel," Dr. Gittell explained. Bretton Woods also had wonderful train service, with 57 trains a day arriving at one point. The hotel also had a huge capacity to house and feed guests. And, unlike Portsmouth harbor where German U-boats (submarines) lurked, it was defensible, he noted.

Furthermore, FDR was able to enlist the support of U.S. Sen. Charles W. Tobey, a staunch Republican, of Temple, for a more global and less isolationist view by appointing him to serve as a U. S. delegate at the Convention.

The role of the federal government was key in New England following World War II when many returning servicemen were able to attend college, thanks to the G.I. Bill.

"The best and the brightest went to college, and New England developed its brainpower," the UNH economist explained. The economy of New Hampshire and New England, which had been heavily weighted until 1940 toward mills and manufacturing, became far more diversified and globalized after World War II, taking advantage of its colleges and universities to become both defense- and high-tech- oriented as investments were plowed into research and development. Over 40 percent of New Hampshire's economy was in the manufacturing sector in 1940, whereas today that figure stands at about 11 percent, Dr. Gittell said. The state's economy also includes retail and hospitality and tourism sectors, he added.

Dr. Gittell did a workforce and job analysis for the Resort at the time it successfully sought local voter approval to create an overlay district that would permit construction of a pedestrian village at the base of the Bretton Woods Ski Area.

Dr. Jeff Coons of Manning & Napier Advisors, Inc., said that a shift from contrarian indicators to confirming indicators is now taking place in today's very challenging environment. He urged investors to focus their dollars on the strong remaining survivors.

Dr. James "Jim" Broughton, Historian of the International Monetary Fund and its Assistant Director in its Strategy, Policy and Review Department, explained that the 1944 Bretton Woods Agreements established a new kind of gold standard that was both fixed and yet moderately adjustable. It was this arrangement that President Richard Nixon abandoned on Aug. 15, 1971, he reminded the gathering. The United States can no longer economically dominate the world stage, and many countries are now major players on the world economics stage, Dr. Broughton said.

The Commemoration of the 65th Anniversary of the International Monetary Conference has provided a time to reflect back on history, even in the midst of today's economic crisis. "We have to plan for the future," Dr. Gittell said. "What industries can we as a country lead in? What do we want for our children?"

The Bretton Woods Conference was held after two years of preliminary work had been undertaken by members of both the U. S. and British Treasury Departments, Dr. Gittell noted. Their efforts began during some of the darkest days of World War II, allowing work to go forward at the 1944 Conference, which took place shortly after D-Day and the invasion of Normandy.

Today's American youth should become engaged in the global economy, be learning other languages and familiarizing themselves about other cultures, and not spend time lamenting that the days are over when the United States dominates the scene, said Dr. Gittell. He urged all young people to ask themselves, "What's my role?"

Saturday evening's five-course dinner, which included an entrée of thyme-seared chicken supreme and a dessert of meringue swan "floating islands" and roasted strawberry soup, was based on the menu served on July 22, 1944 at the Conference's farewell dinner.

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